Why this family business is sticking with bricks-and-mortar but ditching the checkout
Tuesday, October 23, 2018/
There are plenty of people asking what the future of retail looks like in Australia.
After all, when household names like Roger David take their place in the business graveyard, questions get raised about everything from commercial rent to lacklustre sales and online shopping.
But not everyone is buying the doom and gloom narrative.
Dean Salakas, self-titled “chief party dude” at retailer The Party People, is charting an expansion, unconvinced the glory days of bricks-and-mortar retail are over.
“In 20 years time, online retail is still going to be a minority share of the retail pie,” he tells SmartCompany.
“Bricks-and-mortar is where all the sales are being made and it’s where they’re going to be for the foreseeable future.”
He’s not wrong. Australia Post figures placed online retail at about 8% of total retail spending last year, and by 2020, only one in 10 items are predicted to be bought over the internet.
E-commerce has a growth story to tell though — one Salakas is intimately familiar with. His business has been trading online since 1998 (a year before eBay launched in Australia).
He’s been around the block, so to speak, but has recently decided opening a raft of new stores in NSW, and potentially Queensland, is the next step for The Party People.
“When we were one of the first companies on Google it was just enough to be there, you didn’t need a strategy,” he says.
“It was small independents winning the race online, but now the big retailers are doing quite well.
“Online is so complex. You have to be a sophisticated business to play and the big guys have the budget and the technology to get into artificial intelligence.”
Walk in, scan stuff and walk out
Salakas was tight-lipped on how many stores The Party People will be adding to the two it already has in Sydney, but he’s sure about the strategy.
“The long-term future for us is being strong online and leveraging that digital leadership into rolling out more stores,’ he says.
The new stores are unlikely to be reminiscent of the dollar-store party emporiums littered throughout Australian shopping strips either.
This week The Party People will become one of the first retailers in Australia, after Woolworths, to trial scan-and-go technology, with a pop-up store which will let customers skip the check-out.
“They’ll walk in, scan stuff, walk off and pay for it all on a phone,” Salakas says.
It will also be one of the first in the world to try out the new way of shopping after Amazon made a splash with its checkout-free grocery store concept Amazon Go.
The expansion has been a long time coming for Salakas, who appeared on Shark Tank in 2015 asking for $400,000 to help him fast-track the company’s bricks-and-mortar dreams.
Retail Zoo founder Janine Allis was interested in 40% of the business, but Salakas turned her down, wanting to keep the company in the family.
Instead, he’s waited patiently for the business to build to a point where it can control its own destiny, with sales growth tickling along despite an influx of competitors and profitability doubling in the last year.
The effort hasn’t come without recognition. Last week Salakas was in Melbourne, accepting the Independent Retailer of the Year award at the Australian Retailer Association’s annual awards breakfast.
He also picked up the Online Retailer of the Year and the Roy Morgan Retail Leader of the Year award, even snapping a photo with shark Naomi Simson at the event.